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MetroPCS Investors Approve T-Mobile Deal Amid Sprint Takeover Battle

Written by: Antoine Gara04/24/13 - 11:33 AM EDT

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NEW YORK (TheStreet) -- MetroPCS shareholders have approved the wireless carrier's merger with T-Mobile USA, a unit of German telecom conglomerate Deutsche Telekom, in a deal both companies hope will revive their competition with AT&T and Verizon.

Shareholder approval for the merger also comes after Deutsche Telekom was sharply criticized by hedge fund investors such as Paulson & Co. for piling on too much high cost debt on the combined T-Mobile and MetroPCS.

Earlier in April, T-Mobile amended its offer for MetroPCS, in a change of the terms to the merger that reduced overall loans by $3.8 billion and cut the interest rate on the remaining $11.2 billion in financing by 50 basis points.

Vocal critics of T-Mobile's initial offer such as Paulson & Co., run by hedge fund billionaire John Paulson, and P. Schoenfeld Asset Management took the amended terms as reason to support the proposed merger, paving the way for Wednesday's shareholder approval.

T-Mobile's initial proposal paid MetroPCS shareholders $4.08 in cash and half of a share of the combined company. MetroPCS valued the total deal at between $16.50 and $18.80 a share in a recent proxy filing. Under the terms of the initial deal, Deutsche Telekom will take a 74% stake in the combined T-Mobile and MetroPCS.

The merger comes at a crucial time for T-Mobile amid the company's newly unveiled effort to sell unlimited Apple iPhone 5 plans at a discount to top wireless carriers AT&T and Verizon.

T-Mobile is also offering a no-contract iPhone, meaning consumers will not be asked to sign fee-laden two-year contracts to receive subsidized iPhones.

In the wake of Paulson & Co.'s support of amended terms to T-Mobile's offer for MetroPCS, another twist to the wireless industry emerged.

On April 15, satellite TV provider Dish Network unveiled a $25.5 billion offer for Sprint, in a proposal to trump a previously agreed merger agreement between the nation's third leading wireless carrier and Japanese telecom SoftBank.

Dish's move comes amid a frenzied 18-months in telecom consolidation, where the likes of Sprint and T-Mobile have sought ways to shore up their finances, increase wireless service and grow customer bases to revive competition with AT&T and Verizon, who've consistently gained market share in a consumer switch to data intensive smartphone devices.